Post Office Recurring Deposit
This is a 5 year scheme where one invests on a monthly basis. However, there does exist an option for the fund to be closed after 3 years, which comes with a penalty of 1%. The advantage with the postal recurring deposit over the bank recurring deposit is that the minimum monthly investment is only Rs.10/- with no upper limit. In case the payment is made once is 6 months or on a yearly basis, there are discounts for that too.
The limitation is that the interest rate is fixed at 7.5% only and auto-debit to bank account is not available.
There are no tax benefits from the scheme. However Post Offices have not been deducting TDS.
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